THE PROBLEMS OF PEACE 



658 
4 G3 
py 1 



A Study of tne Essential Needs of Massachusetts 
During tLe Reconstruction Period 




NATIONAL SHAWMUT BANK 

40 WATER STREET 

BOSTON 



THE PROBLEMS OF PEACE 






COPYRIGHT, 1918 
NATIONAL SHAWMUT BANK 



DEC i G 



QtC 1 



©CLA508620 



"V-r3 I 



THE PROBLEMS OF PEACE 

Mr. William A. Gaston, Chairman of the Board 
of Directors of the National Shawmut Bank, who was 
selected to organize the government's war labor 
program in Massachusetts, and was engaged in this 
work from November, 1917 to August, 1918, has 
written the results of his experience and observation 
as to the more important needs of Massachusetts 
during the reconstruction period. 

Mr. Gaston does not press for particular rem- 
edies or methods but wishes to interest the people 
of Massachusetts in the real need of constructive 
action. With that purpose this pamphlet is issued. 

NATIONAL SHAWMUT BANK 

Alfred L. Aiken. President 



INTRODUCTION. 

TNTRICATE and important as were the problems of war 
•*- preparation and participation, it is likely that in the 
end they may seem simple compared to the difficulties which 
face us in its readjustment to normal peace conditions. 

The obstacles in the way of a military victory have been 
overcome because of the fact that there were no differences 
of opinion as to the main object to be attained. Individual 
and party theories as to economic and administrative policies 
have been subordinated for the successful accomplishment of 
the end in view. 

The world will never again return to where it was four years 
ago. What is called conservative opinion must modify 
its aims to include the best part of what is called radical 
policy. On the other hand, radicalism, as shown by its 
inevitable results when put in actual practice, as to-day in 
Russia, where the radicals have taken the property of the nation 
without law, is an even greater menace than the militarism 
now justly defeated in this great war. 

It is a time for tolerance, of getting together, and in the 
compromise of opinion to work out a reasonable and saving 
program. The United States, which gave real democracy to 
the world, has during the last fourteen decades, shown that 
under it, real progress never before witnessed in the history of 
the world was possible. 

During the war the American people generally refused to 
give serious consideration to reconstruction problems because 
of the fear that this might divert them from the immediate 
prosecution and winning of the war, and as a result we are 
as unprepared for peace as we were for war. 

The purpose of this pamphlet is to direct attention not 
solely to the larger questions of reconstruction now being 
considered the world over, but especially to the not less 
important because purely local problems which are necessary 
to understand and to remedy that Massachusetts may bold 
its own in after the war competition. 



The great banks of the United States have for the last ten 
years been pioneers in the stimulation of our foreign trade 
program. The banks are not alone the trusted custodians of 
the people's funds, but are confidants and advisers of the 
business man, who looks to them not only for financial assistance 
but for information. 

The task of organizing the war labor program of the 
nation for Masssachusetts, which was given to me on its in- 
ception and which I held for the nine months following, gave 
me opportunity to study the problems of the labor demobiliza- 
tion, and industrial reconstruction on a peace basis; one of 
the most important tasks now before us. 

It is in a spirit of suggestion, not to press for particular remedies 
or special methods, but solely to arouse the people of Massa- 
chusetts to the consciousness of a real need, that this pamphlet 
is issued. 

William A. Gaston. 



RAILROAD TRANSPORTATION. 

The patriotic desire of the American people to win the 
war proved that a republic can adopt strong measures to 
accomplish necessary ends. Sectional rivalries and individual 
competition were put aside. The government was encouraged 
to assume the direction of business, and to control not only 
the trade but the habits of the people. The test of the per- 
manence of our institutions is now to be whether its machinery 
can stand the strain which reconstruction is about to put upon 
it. 

Reasonable selfishness is the mainspring of progress, and after 
the war individual competition in the contest for industrial 
supremacy will naturally be resumed. While we are a union 
of states, these states are legitimately competing against each 
other for business precedence. New England, for the first eighty 
years of our national life, the undisputed leader in industry: 
with the growth and shifting of population, has been largely 
isolated from the source of raw materials for manufacture, 
and likewise from its markets. For more than thirty years 
thoughtful men in Massachusetts have realized that unless 
something was done to improve the transportation handi- 
caps under which Massachusetts labored we would be increas- 
ingly at a competitive disadvantage, not alone for home but 
for foreign trade. More than a score of commissions which 
included in their membership a large number of practical 
experts, have reported from time to time on this matter, all 
in practical agreement as to the great need for action by 
Massachusetts. 

In 191 1 nine million dollars were appropriated by the Com- 
monwealth to put a port program into effect. The ' subse- 
quent separation of the Boston & Maine and the New Haven 
railroads nullified the expenditures made or contemplated, 
which were based on the theory that this merger was to be 
permanent. 

In 1 91 5 the legislature passed an act proposed by the then 
Board of Port Directors, creating a new harbor line, which 

7 



defined the future progress of port development as the needs 
arise and financial resources of the state permit. The value 
of this plan was that it included the best ideas of the score or 
more of the plans for port development reported by the various 
commissions which had studied this matter during the past 
generation. The acceptance by the U. S. Harbor Board, com- 
posed of engineer officers in the U. S. War Department, of the 
legislative act of 191 5, enables the state or nation to proceed 
to develop its most important natural asset to capacity without 
danger that the fundamentals will later be changed. 

The purchasing capacity of the people of the United States 
before the war was not sufficient to keep the manufacturers 
of this country who had entered into business fully occupied 
during twelve months of the year. To keep wage earners 
from unemployment a foreign market had to be found for our 
surplus manufactured product. The competition of other 
manufacturing sections in the products of which Massachu- 
setts was the largest producer has been growing more intense 
year by year. In 19 16 the National Shawmut Bank published 
a pamphlet called "The Port of Boston," designed to show 
that while the production of Massachusetts had increased mod- 
erately, the comparative growth was not satisfactory. Manu- 
factured cottons in three southern states had increased by over 
two thousand per cent, during a period where production of 
manufactured cotton goods in Massachusetts had increased 
but one hundred and sixty per cent. Missouri is gradually 
approaching our annual output of shoes, and the rate of prog- 
ress shown threatens in a few years, if continued, to pass us. 

The entrance of the United States into the war, with such 
wonderful results and achievements, and the transfer of gen- 
eral industry to war needs, has temporarily halted normal 
production; while new manufacturing districts of tremendous 
capacity for war production have been created nearer to the 
centres of population, which will later be competing with 
Massachusetts in the normal productions of peace. 

The taking over of our national transportation systems by 
the government has been followed by the greater utilization 
of Boston harbor as a war shipment depot. The U. S. Gov- 
ernment has purchased the Dry Dock at South Boston, under 
process of construction at state expense. The largest trans- 

S 



shipment warehouse in the world has been built on South 
Boston flats, purchased from the state by the Government. 
Taking over the Cape Cod Canal has been recommended 
favorably to Congress by the administration, thus placing 
under national control the principal facilities which can and 
should make Boston harbor one of the greatest ports on this 
continent. 

New England has a greater stake in a proper solution of this 
transportation problem than any other section in the United 
States, and if it now refuses to recognize its handicaps or neg- 
lects to protect its resources it cannot long survive the intense 
rivalry of other sections which do protect them. 

Considering cost of freight and service, a manufacturer on 
the East Boston side of Boston harbor, wishing to send goods 
overseas by a ship at dock on the South Boston side, is at a 
disadvantage with a competitor in New York state. For ship- 
pers west of the Hudson river and the Canadian border both 
sides of the port are available at a single rate. For shippers 
inside these lines, which means our own people, use of the port 
of Boston, unless the ships taking their goods are at a pier con- 
trolled by the railroad on which they happen to be, two rates 
and long delays are involved. Time and again during the last 
thirty years, reports of the various commissions have called 
attention to this obstacle to New England's trade progress 
without result. 

The physical condition of Boston's transportation facilities 
are poorer than can be found in any large terminal in our coun- 
try. We lack tunnels for transfer purposes, our harbor needs 
a lighterage system for temporary relief; the terminals of our 
railroads located in various parts of the city are so situated 
physically that transfers of freight between them are costly 
and difficult, when not practically impossible. 

Nine months after entrance of the United States into war, 
the government found it a measure of war necessity to take 
over the railroads. The railroad executives gave their pledge 
that during the war they would abandon individual and 
competitive activities, *and the record of freight train opera- 
tion from January to May inclusive, 191 8, is evidence that for 



* (Theo. H. Price, Actuary to the U. S. R. R. Administration.) 

10 



the purpose of supplying our armies at the front this promise 
has been made good, and what co-ordination of service can do. 

FREIGHT TRAIN OPERATION JANUARY TO MAY INCLUSIVE. 1918. 

Increase or decrease. 
1918. 1917. Amount. Per cent. 



Freight train miles 


260,754.192 


269.227,192 


(d) 


8,472.731 


(d) 


3.1 


Loaded freight car miles 


5.903.2S5.9S5 


6,456.154,497 


(d) 552.868,512 


(d) 


8.6 


Empty freight car miles 


2,620.147,014 


2,664.267,262 


(d) 


44.120.248 


(d) 


1.7 


Total freight car miles — 














loaded and empty 


8,523,442,999 


9.120.421,759 


(d) 596 


(d) 


6.5 


Freight locomotive miles 


304,196,165 


315,549,190 


(d) 


11,353,025 


(d) 


3.6 


Revenue ton miles 


154,195.764,273 


155,066,696,398 


(d) 870,932,125 


(d) 


6 


Non-revenue ton miles 


14,156,151,131 


14,311,931.058 


(d) 155,779,927 


(d) 


1.1 


Average number of freight 














locomotives in service 


30,655 


30,264 




391 




1.3 


Average number of freight 














locomotives in or await- 














ing shop 


4,676 


4,455 




221 




5.0 


Average number of freight 














cars in service 


2,379,553 


2,282,737 




96,816 




4.2 


Average number of freight 














cars in or awaiting shop 


122,208 


127,181 


(d) 


4,973 


(d) 


3.9 


Home 


76,083 


96,525 


(d) 


20,442 


(d) 21 


Foreign 


46,125 


30,656 




15.469 




50.5 


Tons per train 


646 


629 




17 




2.7 


Tons per loaded car 


28.5 


26.2 




2.3 




8.8 


Average miles per loco- 














motive per day 


65.7 


69.1 


(d) 


3.4 


(d) 


4.0 


Average miles per car per 














day 


23.7 


26.4 


(d) 


2.7 


(d) 10 


Per cent of empty car 














miles 


30.7 


29.2 




1.5 




5.1 


Per cent of freight locomo- 














V tives in or awaiting shop 


15.3 


14.7 




0.6 




4.1 


Per cent of freight cars in 




> 










or awaiting shop 


5.1 


5.6 


(d) 


0.5 


(d) 


8.9 


Revenue ton miles: 














Per freight locomotive 














per Month 


1,006,007 


1,024,754 


(d) 


18,747 


(d) 


1.8 


Per freight car per 














Month 


12,960 


13,5866 


(d) 


626 


(d) 


4.6 


Average miles operated 














— single trace 


222,670,79 


22,251.037 




16,042 




a 


(a) Less than one-tenth of one per cent. (d) Decrease. 



Locally the New Haven is improving its freight yard facilities. 
The extension which gives the Union Freight Line direct access 
to the New Haven freight yards over Northern Avenue is in 
process of building. 

Transfer between the Grand Junction Line of the Boston & 
Albany and the New Haven has been improved. But, gen- 
erally, railroad accommodations, on which New England de- 
pends to facilitate trade, remain as before the war. 

As regards the physical condition of our New England 
railroads an official report made to the Public Service Com- 
mission, September 19, 191 8, shows road beds and tracks not 
in satisfactory condition, in many cases dangerous. Many 
of the bridges are old, poorly designed, lacking the margin of 

11 



safety demanded by good engineering practice, and wholly 
unsuited to modern operating conditions. The physical con- 
dition of stations and other property, while not a menace to 
public health, is, with respect to cleanliness and general 
maintenance, not up even to the standards of the past. 
Large numbers of freight cars are of the wooden under frame 
type, and on account of age and general condition repeatedly 
taken out of service for repair. This report further states 
that the Boston & Maine recently had five hundred and ninety 
passenger cars of the old all wood type, the age of which can 
be estimated by the fact that they were equipped only with 
kerosene lamps. There are but forty miles of rock ballasted 
track on the New Haven road in this state. Passenger service 
on our three Boston roads has been reduced by approximately 
two million miles a year. Embargoes have been frequent, 
causing great loss to New England industries, which have 
resulted in the diversion of the business to express companies, 
and with most unfavorable effect on the passenger service. 

Any statement of railroad conditions under Federal control 
would be incomplete without a brief history of the railroads 
for the last twenty years. The tremendous and in many 
cases, unproductive railroad development which went on in the 
United States during the 70's and 8o's was greatly reduced 
after 1890. Parallel roads competed unnecessarily with each 
other in the same territory. Claims of unfair dealing by 
some brought about general laws regulating railroad control, 
and as transportation conditions grew more difficult and 
unprofitable the laws regulating them increased. 

A policy of railway regulation intended to keep railway 
rates low was adopted. For instance, the Hepburn amend- 
ment to the Interstate Commerce Law empowered the Inter- 
state Commerce Commission to fix at its discretion a maxi- 
mum railway rate satisfactory to it, but it did not give the 
commission power to fix a reasonable minimum rate, the 
assumption seemingly being that the commission would 
always find rates that were too high, but never any that were 
too low. 

War proved it was not possible under the laws of com- 
petition to segregate the business of transportation, and 
thus try to establish the contradiction that transportation 

12 



could be efficient or prosperous with an arbitrarily fixed and 
inflexible basis of rates, and an abnormally flexible range of 
expense. 

In an address in New York City six years ago, the late 
James J. Hill, one of the ablest of American railroad adminis- 
tratives, pointed out that our national railroad situation 
had about reached the breaking point. The capitalization per 
mile of our American railroads, not their actual value, — 
that is, the total amount of stock and bonds on which interest 
was to be earned, was the lowest in the world; about one-half 
as much as in any other country with which comparison was 
possible, and in some cases only one-third as much. The 
carrying cost per ton mile haul was less and the number of 
tons hauled per mile per hour was greater than in any country. 
Refusal to allow increases in freight and passenger rates, 
considered with the rising cost of commodity prices, created 
a situation where unless relief was afforded quickly, railroad 
bankruptcy was imminent. Investment capital for needed 
improvement was not available, and new money could not be 
found for investments under such conditions. The real 
trouble with transportation was insufficiency of our ter- 
minals to do the business as it existed then, and which the 
natural increase in population and business would make 
worse year by year. The quickness with which water can 
be emptied out of a bottle depends entirely on the size of its 
neck, and the terminal facilities, or necks, of all the railroads 
in the United States were inadequate. All the general con- 
ditions described by Mr. Hill applied particularly to our New 
England roads, with this additional disadvantage: the rail- 
roads in Boston have three separate necks, each inadequate 
for their own purposes, and utterly so when the needs of the 
city and the industrial section behind it are concerned. 

Mr. Hill's statement of facts and plea for relief were dis- 
regarded. Restrictions on railroads and restrictions in their 
securities were made more oppressive. After Europe went to 
war, and for the nine months after our entrance, railroad 
facilities were taxed to their utmost, and at the end of 191 7 
there was what amounted to practically a break-down in trans- 
portation facilities. The working force had decreased, approxi- 
mately seven hundred and fifty thousand railroad men having 

13 



been taken for service in the army and navy, and to build and 
operate railroads in France. The railroads kept going, work- 
ing the remaining employees as best they could; tonnage 
of locomotives and cars was increased; repairs and renewals 
were neglected, and the inevitable result was shown in em- 
bargoes and manufacturing plants closed for want of raw 



PERCENTAGE OF TOTAL EXPORTS SENT FROM NEW YORK AND BOSTON 




60 

50 
40 
30 
20 

gio 

o 

u 
£ 
















L7 






































































































YORK 












— — — — — BOSTON 


































1 










19] 


LO 1911 1912 1913 1914 1915 1916 19: 
"Iscal years ending June 30. 



materials. The fuel supply was inadequate, giving us "heat- 
less Mondays" and other personal and business inconveniences. 
When under stress of national war needs the government took 
over the operation of the railroads in January of this year, 
an extraordinary reversal of official attitude was shown. 
Practically all the measures of relief which for many years 
had been asked for by the railroad administrations and denied 
were almost immediately made effective. Restrictions were 
removed and competition abandoned. Freight and passenger 

14 



rates, much higher than ever allowed under private ownership, 
were allowed. Large increases in wages were granted to em- 
ployees. Immense sums of money were and are being spent 
in needed improvements. 

Lately the announcement was made that the national gov- 
ernment had consented to advance large sums of money to 
New England roads for rehabilitation, but unless our people 
are determined that it shall be apportioned not alone to im- 
prove local conditions, but to remedy, and provide the ter- 
minal and transfer facilities, lack of which is now operating 
to restrict the development of our business, the conditions 
necessary for growth of new business in this section will not 
be improved. 

Under the law by which the govermnent took over the rail- 
roads they must be turned back to their former owners twenty- 
one months after peace is declared. There are many con- 
servative people who do not believe that in the light of our 
world interests and dependence on railroad facilities there can 
ever be a return of the railroads to the laws of competition, 
dominated by private control. Railroads cannot in any case 
be returned to their former owners at the end of twenty-one 
months period if this carries with it a return to the restrictions, 
removed by the government when it assumed control. 

Railroad income must provide for repayment to the govern- 
ment of the additions to capitalization made under government 
auspices. Otherwise private investment will not, as before 
the war, be forthcoming for the expansion always needed. 

If the government control is continued, will it buy the rail- 
roads, or merely manage them, as it is now doing, guaranteeing 
a return on private investment? 

If the railroads are purchased, how are the owners to be 
compensated ? 

These are only a few of the questions which must be deter- 
mined within the next few months. Without attempting to 
theorize on any particular measure of relief there is a general 
agreement that a system of water transfer in Boston harbor, 
which for a number of years has been urgently recommended 
by the Boston Chamber of Commerce and other commercial 
bodies in Boston, is capable of being quickly and cheaply 
installed, should be established immediately. 

15 



The Union Freight Road, providing for land transfer via 
the Union Freight R. R. between the Boston & Maine and New- 
Haven, should be electrified and improved. With the new 
tracks over by Northern Avenue bridge should come a reas- 
onable revisal of ordinances now restricting its use. Dur- 
ing the month of January this year, a report to the Interstate 
Commerce Commission shows that seven hundred and forty- 
eight cars were "unduly held" by the New Haven and the Bos- 




Plan Showins Union Freight Emleqad andPdoposed connection with- 
NY7HH.% HDE-FdeightY^ds at So. Boston ovee Northern Ave Bpid6& 



ton & Maine railroads, because of inability of the Union Freight 
Line to receive them. As the goods transferred over this road 
are in the main of a perishable character, this meant a total of 
approximately twenty-five thousand tons of needed supplies 
unduly delayed. The increase in the costs of food-stuffs due 
to transfer delay and spoiling is an important factor in the 
cost of living. 

Some form of physical connection between the roads by an 
extension of the Grand Junction road to the New Haven 

16 



freight terminals should be worked out, and above all the 
practical co-operation of all our railroad facilities, the removal 
of all agreements restricting the free use of all our docks — 
the creation, under whatever control, of a real terminal which 
will make the port of Boston the real centre of New Eng- 
land's business. We have all the natural advantages, a fine 
harbor, twenty-four hours nearer to Europe, which means the 
advantage over our Atlantic port competitors of at least one 
round trip a year. The cost of unifying our terminals is small 
in comparison with the amount of benefit which would be 
received. 

The only thing needed is to awaken our people to the great 
importance of joining in the effort to bring about this result. 



17 



THE U. S. MERCHANT MARINE. 

The ability of the United States to trade freely in all the 
markets of the world depends on : — 

i. Financial strength. 

3. A navy large enough to protect our interests. 

3. An unfettered merchant marine. 

4. A real awakening of national interest in a foreign market 
for our products. 

The war has transferred the financial supremacy of the 
world to the United States. Our navy has proved its worth 
during the war, and our people will insist that it be main- 
tained at adequate strength. 

The present position of the merchant marine, and the rea- 
son for its support, are treated briefly in the following: 

In 1855 the United States had an ocean-going fleet of about 
two and a half million tons, twice as large as it had when 
Europe went to war in 191 4. After the Civil War the nation 
lost its interest in foreign trade, and as year after year saw 
more and more restrictions placed by law on shipping, higher 
charges and no encouragement, our tonnage dwindled. Alien 
ships not only carried our goods overseas, buc their owners 
dictated freight charges, controlled American business and 
practically had it in their power to decide what ports in the 
United States could do business. Pools were able to dis- 
courage and defeat competition, and in short, an American 
merchant marine under pre-war conditions seemed hopeless. 

When the war came, it was soon apparent that if men and 
supplies were to be sent to Europe, ships and more ships must 
be had. Under the pressure of this emergency, we had to 
build ships, and now the task will be to utilize them in the 
nation's interest, to carry our goods to the markets of the 
world. 

Under the program of the United States Shipping Board, we 
have built or have under construction an aggregate fleet of 

18 



two thousand, six hundred and ninety-three ships of eleven 
million gross tons weight. At a liberal estimate these ships 
could be built before the war for seventy-five dollars a gross 
ton. Under war conditions and prices, it will cost the govern- 
ment for the war fleet probably two hundred dollars per ton.* 
Congress has already appropriated or authorized three billion, 
fifty-four million, three hundred and fifty-six thousand dol- 
lars, and further grants have been asked for by the Shipping 



300 
200 

B 
U 

3 100 

O 

O 

M 
§ 
O 
■H 
f-t 
H 
•H 

a 


BALANCE OF TRADE AGAINST UNITED STATES IN TRADE WITH 
SOUTH AMERICA 














































































































































































19 


10 1911 1912 1913 1914 1915 1916 IS 
Fiscal years ending June 30. 


17 



Trade Between United States and South America. 









Balance 


Year. 


Exports to S. A. 


Imports from S. A. 


of Trade. 


1910 


393,246,820 


3196,164,786 


#92,917,966 


1911 


108,894,894 


182,632,750 


73,737,856 


1912 


132,310,451 


215,089,316 


82,778,865 


1913 


146,147,993 


217,734,629 


71,586,636 


1914 


124,539,909 


222,677,075 


98,137,166 


1915 


99,323,957 


261,489,563 


162,165,606 


1916 


180,175,374 


391,562,018 


211,386,644 


1917 


259,559,458 


542,212,820 


282,653,362 



Estimate Foreign Trade Council. 

19 



Board. In August, 191 7, there were sixty-one shipyards in 
the United States. There are now one hundred and fifty-five 
completed, thirty-five nearly completed and thirteen less than 
half completed. Three hundred and eighty-five thousand em- 
ployees are employed in these yards, with a weekly pay-roll of 
ten million dollars a week. 

The Shipping Board figures that from August, 1914, to Sep- 
tember, 1918, there was a loss due principally to submarines 
of fourteen million tons, and during this time the total new 
tonnage to meet this loss was ten million tons, or a net loss of 
four million tons. 

"The world will need, at least for a considerable period after the re- 
establishment of peace, the services of a tonnage even greater than that 
which existed prior to the war, and the merchant fleets now in being, 
even with the augmentation at present provided for by the construction 
programs of the United States and Great Britain, will be inadequate to 
the service they will be called upon to render. It now seems probable 
that it will require the continuation of the present accelerated program 
of construction for a considerable time after the war, in order to bring 
the world's ocean tonnage again to the point where it is adequate to meet 
the world's needs." 

"The United States will emerge from the war with a large merchant 
fleet and with the facilities for its renewal and expansion, but unless posi- 
tive steps are taken in the very near future toward the formulation and 
adoption of a sound national maritime policy, it may be set down as 
absolutely certain that these newly constructed American vessels will not 
remain in operation under the American flag and that the American mer- 
chant marine, rehabilitated with vast expenditure of capital and effort 
as a war emergency measure, will again be dissipated under the operation 
of inexorable economic laws. 

"For one thing is absolutely sure: Unless these vessels can be oper- 
ated profitably under the American flag, either they will be transferred to 
foreign registry, or they will rust out a useless existence which will soon 
terminate on the scrap heap. For production is fundamentally a question 
of profit, and production of ocean transportation, especially in foreign 
trade, where we must meet the competition of the world's ships, is not 
differentiated in its amenability to this economic law from the production 
of cotton or lumber or any other of the myriad articles of our daily com- 
merce."* 

Whatever decision is made by the government as to pur- 
chase, lease or control of land transportation will also apply to 
the tremendous ship tonnage built since the war by the Unit- 



Report Foreign Trade Council, Nov. 8, 19 18. 

20 



ed States. The excessive cost of these ships due to stress of 
war conditions and prices must be charged off as a war debt, so 
that the return on these ships may be computed on the same 
basis as any business investment. If the ships are to be owned 
by the government and privately operated this basis of fair 
charge must be determined, and likewise, if sold for private 
ownership and operation. 



7 
6 
5 

4 

.3 

to 
u 
<s 

r-t 
r-t 
O 

ft 2 
0-1 

o 
n 

s 

i-l 

« 


EXPORTS FROM UNITED STATES AND BOSTON. 1910 - 1917. 
































i 












































































/ 


• 
















































! 




































19 

F 


10 1911 1912 1913 1914 1915 1916 IS 
iscal years ending June 30. 


17 



For whose benefit will these ships be run? Will they be 
controlled by the government, or by shippers, or by buyers? 

Because of the value of its natural asset, on the ocean a 
day nearer to Europe than other Atlantic ports, Boston and 
New England should be fairly treated in arranging the methods 
of competition for trade in the countries of the world. The 

21 



use without discrimination of all natural ports on the Atlantic 
and Pacific seaboards, and the elimination of the discrimina- 
tions against vessels flying our flag due to railroad agree- 
ments with foreign steamship lines, existing before the war, 
should be insisted upon. 



22 



TAXATION 

Taxation in Massachusetts has been growing at an alarming 
rate. In ign our total municipal, county and state expen- 
ditures amounted to one hundred and ten million, five hundred 
and eighty-nine thousand dollars; in 191 5 (the latest figures 
now compiled) this total had become one hundred and forty- 
five million, two hundred and ninety-three thousand dollars. 



1 


8 8 


h Q s 
000 


Mft 


ag^asiS'Ri _i*3 _E>_(H 


es.w 


Arir 




_ s.79 


Ark 




_ _ .71 


Cal 




9.18 


Colo 




4.08 


Dal 


Wwm^ 




Flo 


SnT r" 


. __ _ - _ _ .71 


Oft 




2.SB 


Idaho 




-- 5.71 


111 


■INI 


. _ - _ .8$ 


Jnd 


9 


._ _ _ _ .58 






_ _ 0.00 


Kims 


JJ 


_ _ .04 


Ky 




_ 1.0S 


Lft 
Halms 




_ _ _ _ _ 2.80 


m 

MASS 




_C 10.25 


Eieh 


f^BBB 


2.30 


Minn 




1.18 


Kits 




8.70 


to 




. _ - 2.3.7 


Hoot 




. __ _ _ _ _ 2.98 


Rob 


j^p _ -___ - --- - 


. __ _ -- 0.00 






SSKlSlB- !<?»!_ Q 3BBi 


_ _ 6.89 


N H 


_I_e_____s " ~ 


_ _ _ - - 4.48 


H J 


TnT] -.-- _ 


_ _ .04 


3 Uax 




_ __ 2.69 


H . 


sswa^infas^^ 8 iBsti^iiaiaaiiBi 


_ 12.75 








3.80 


H Dak 






.__ __ .73 








. __ _ _ _____ 1.04 








_ _ _ __ _ 5.15 








__ _ 0.00 


Pecn 






- - .04 


R I 
S Car 




lagli"--" 


- -- 3*40 


S Dei 






-_ 0.00 


Tann 
Texas 






. 6.60 

_ _ _ - - .96 


Va 






_ - - - 4.55 

_ L1.28 


Vt 






__ 1.02 


Hash 


Q 




.___ ___ -.21 


VTa 






_______ _ 0.00 


Wise 






___ __.91 










Average 
(48 States 












._ __ 4.51 


I 







Per Capita Net Indebtedness, 1915, in Foxty-eight States. 



the highest point ever reached, an increase of over thirty per 
cent in the four years which ended before the war inflated 
prices. The taxes paid in 191 5 by the people of Massachu- 
setts were forty dollars per capita, which sets a new state 
mark per capita in the United States, being more than twenty- 
five per cent higher than those paid by any other state in the 
Union. 

Since taxes provide at least seventy-five per cent of the rev- 
enue to meet current expenses, the higher the annual expendi- 
tures the greater the amount of taxes levied. To show a healthy 
condition, wealth must increase at a rate equal to the increase 
in expenditures. In Massachusetts municipalities during the 
period under consideration (1911-15) as measured by the 
assessors' valuations wealth averaged an increase of only 
twenty per cent,, while municipal expenditures increased an- 
nually at a rate of fifty per cent greater than the wealth taxed 
to produce the revenue to meet them. 

In addition to a municipal indebtedness of two hundred 
million dollars, Massachusetts adds the highest per capita state 
debt. The net indebtedness of the forty-eight states in 1918 
aggregated four hundred and twenty-four million dollars, or 
four and thirty-one one-hundredths dollars per capita. The 
net indebtedness of Massachusetts alone was eighty-four mill- 
ion, seven hundred thousand dollars, or one-fifth of the total, 
and our per capita debt was twenty-three and fifty-two one- 
hundredths dollars — four hundred and fifty per cent greater 
than the average, and eighty-five per cent greater than the 
second on the list, New York.* Sixteen states had a per cap- 



* Of this total, fifty-six million, four hundred thousand dollars is 
known as the Contingent debt of the state, and represents the amount of 
indebtedness incurred by the Commonwealth for providing the Metro- 
politan District with common sewer, water and park systems. The obli- 
gation to meet principal and interest charges rests upon the one million, 
six hundred thousand inhabitants of this district instead of the entire 
state. Analysis, therefore, of the Federal Census report of the per capita 
net debt shows that for the inhabitants of Massachusetts outside the 
Metropolitan District this figure is seven and eighty-five one-hundredths 
dollars and for residents within the district, on whom rests the burden of 
both Contingent and Direct debt, forty-four and twenty-two one hun- 
dredths dollars. The average for the entire state thus gives the census 
figure twenty-three and fifty-two one-hundredths dollars. (See chart.) 

24 



Massachusetts State Tax, 1885-1918 



:88S8I 



IO»N«Ot'lOMlbOlO(-MDlSlSNlfllOi50(OOlo3l3lOMOl>bOO 



iHr-««Cvl<\li-*fHi-!CM<\ii-«r-l>-tr4.-li-l,-t.-0ajM<- 


.-1 .-4 




1 


















1 






1 






r 




















I 




12,000,000 






















1 




















































































1 


































































r 
























































































11,000,000 








































































































































- 




























































































































10,000,000 


































































































































































































> 


I 


































































/ 


* 






9,000,000 




























































/ 


































































/ 


































































i 




































































/ 










8,000,000 


























































/ 


















































































































































































































7,000,000 














































































































































































































































































6,000,000 












































































































































































































































































5,000,000 














































































































































































































































































4,000,000 














































































































































































^ 


































































1 




























5,000,000 








































i 
































































1 


































































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v 




















m 






























2,000,000 


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s 








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1 


































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s 


/ 






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/ 




*>, 






/ 


s 


/ 




































































































1,000,000 














































































































































































































































































I 
< 
< 




































































a 1 

O < 
c 


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< 

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< 


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;3 

l 0» 



25 



ita net debt of less than one dollar, New Jersey's and Pennsyl- 
vania's each amounting to only four one-hundredth s dollars. 

Although high taxes are a direct burden on the individual tax 
payer, they rest even more heavily upon manufacturers who 
find it difficult in normal times to compete with manufacturers 
of other states, where taxes and wages are lower and the laws 
relating to manufacturing more favorable and not so severe. 
High taxes retard industry, and business cannot prosper under 
unfavorable conditions. 

When public money is properly expended every citizen 
realizes that he should get more for taxes than for any other 
expenditure he makes. In Education, Good Roads, Health 
and Property Protection, the benefits from which are great, 
we have done more for our people than has been done in any 
other state. But we must insist that all the money paid 
out in the form of taxes, over which we have control, is econom- 
ically and efficiently expended, not only with a view to get- 
ting a hundred cents of value for every dollar spent, but to 
eliminate the expenditure of every dollar not vitally necessary 
to the proper operation of our local governments. 

In the days of reconstruction after this war, when the manu- 
facturers of Massachusetts will be in open competition not only 
with those of other states, but also with the world, it will be well 
for us if we go into the competition unimpeded by taxes greater 
than in competing states, and freed from the cost of govern- 
mental non-essentials which reduce our ability to compete. 

While by comparison with national standards our state tax is 
large, and as every additional item of expense which goes into 
cost of manufacturing is important in competition, we will 
need to keep down local and state taxes for another reason. 
The burden of war tax which we must meet is so huge that it 
almost passes comprehension. When one is fighting for his 
life the cost of the contest seems an unimportant detail. But 
it must be paid. We have been at war for about twenty 
months. This war will entail a total cost approximating two 
hundred billion dollars. Before the United States can close its 
war books, it will have spent, not including loans to the allied 
nations, twenty-five billion dollars. Our annual interest charge 
on our war debt will be more than the combined interest charges 
of all the European countries and their dependencies only 

26 



twelve years ago.* In one month of this year our war ex- 
penses and loans were greater than the entire cost to England 
of the Boer war.f Including our loans, the war cost to the 
United States will be greater than the total cost of adminis- 
tering the nation for the one' hundred and twenty-eight years 
ending June 30, 191 6. | Deducting all loans to the allies, 
twenty-five billions, or over twelve hundred dollars for each 
family in the United States, must later be paid off through 
taxation. 

The physical destruction by Germany of property on land and 
sea on the western front alone is estimated to be more than ten 
billion dollars, and about half as much more on the eastern 
front. The least money indemnity which can be imposed 
on Germany will mortgage its resources for many years to 
pay the bill for the physical property alone it has destroyed. 

There is no doubt but that Germany is to be an industrial 
competitor with the world after the war. It is believed that 
in the expectation of victory she has been producing certain 



* Indebtedness of Nations, with Amount of Interest Payments, Computed 
up to the Year 1906. 

Country National Debt Annual Interest 

Payments 

Austria-Hungary $1, 092, 863, 255 £48, 2 14,794 

Belgium 621,640,286 24,925,694 

Denmark 64,231,713 2,197.120 

France 5.655,134,825 237,855,497 

French Algiers 6,323,838 737.440 

German Empire 855,963,454 3°,358,3°o 

German States 2,957,356,846 120,537,100 

Netherlands 458,069,211 14,718,505 

Portugal 864,701,627 21,369,000 

Roumania 278,249,239 16,086,604 

Russia 4,038,199,722 172,385,884 

Russia, Finland 27,073,900 1,205,734 

Switzerland 19,787,648 1,037,642 

Turkey 458,603,213 9,499,45<> 

United Kingdom 3,839,620,745 150,295,210 

British Colonies 612,510,084 22,802,418 

Spain 1,899,265,995 69,256.706 

Italy 2,767,911,940 190,803,281 

Totals $26,517,504,541 $1, 134,296,179 

f Cost of Boer War, one billion, one hundred and fifty-five million, 
nine hundred and four thousand dollars: Oct., 19 18, disbursement, one 
billion, five hundred and forty-two million, fifty-six thousand, six hundred 
and thirteen dollars. 

t Thirty-one billion eight hundred and eighty million, nine hun- 
dred and five thousand dollars. 

27 



articles in great quantities, with which, after peace, to flood the 
world, and thus draw into Germany gold which it greatly 
needs. Its industrial structure is thought to be almost as 
intact as that of the United States or England, and it can start 
if internal conditions permit at once producing for competition. 
The manufacturing districts of France and Belgium have been 
devastated, and it may take years before materials can be pro- 
duced, and the destroyed plants rebuilt. This lost time will 
be fatal, and it is suggested that one of th6 peace essentials, 
inasmuch as Germany cannot fully repay in cash, will be to 
compel her to furnish the labor to replace what she has des- 
troyed, and instal from German factories the needed machines, 
besides the employment for a given period at German expense 
of its laborers to restore destroyed agricultural sections 
to their pre-war conditions. This would not be punishment, 
but justice. 

Outstanding Liberty Bonds are about seventeen billions. 
No provision has been made for sinking funds to repay any of 
our various kinds of war indebtedness. Assuming that the 
allies repay their loans, or even the interest on them, the interest 
charges on our own war debt, with a small sinking fund al- 
lowance, will be greater than the total annual cost of con- 
ducting the nation's affairs before the war. 

Over what period will the payment of this war debt be ex- 
tended? To impose this entire burden in taxes on this coun- 
try during the next twenty years will mean heavy handicaps to 
business expansion. It will lessen our opportunities to com- 
pete in the world's markets. Taxation after the war must be 
kept below the point where it will injure cash resources or 
destroy the incentive to enterprise and ability. When taxa- 
tion becomes excessive it destroys the thing that produces it. 
Government expenditure cannot do the same good as the 
same amount spent in fair competitition by the individual. 



28 



AMERICANIZATION. 

The only spirit of reconstruction which can hope to succeed 
is recognition that the main contest is not so much with our 
competitors or rivals as with ourselves, our prejudices, and 
preconceptions of social, industrial and educational ideas. 

During the last twenty years Massachusetts has found that 
business regarded as peculiarly its own has gone from us. 
Competitive industrial invasion has proceeded on a scale of 
which only a few have realized. We cannot fight this con- 
dition as a united body, because we have within our state 
a large body of unassimilated aliens. 

Approximately one-third of the inhabitants of Massa- 
chusetts are of foreign birth; another third the children of 
foreign-born parents, and the other third the children of 
native-born. Of the six leading foreign populated cities in 
the United States, three are in Massachusetts, — Boston, Fall 
River and Lowell. The other three are New York, Chicago 
and Patterson, N. J. Three hundred and fifty thousand resi- 
dents of this state are unable to speak English, and over 
three hundred thousand males of voting age are not naturalized. 

Responsibility for the failure of these hundreds of thousands 
of alien residents to become true citizens, to learn respect for 
our laws, and loyalty to our institutions, is not wholly their 
fault, but largely ours. We have admitted them to our country, 
allowed them to remain apart from us, closed our eyes to the 
conditions under which they live, and have deemed them un- 
grateful because the standards about us which we hoped 
they would adopt when they first came to this country were 
apparently not adopted. Little or no attempt has been made 
by us to have them learn our language; we have been too 
indifferent or neglectful to disclose to them the advantages of 
citizenship and what it means, and too indifferent to care 
whether or not they became real participants in our national 
life. 

As a manufacturing state we depend largely on aliens to 
furnish our industrial working force, and if they have taken a 

29 



radical, and often anti-governmental position to our laws and 
customs, we must take at least a part of the blame. 

There never was a time since the civil war when we have 
been in a better position to approach the Americanization 
problem than to-day. As was shown by their reception of 
the news of victory, our alien residents seemed exalted with the 
fact that the United States has saved their native countries 
from ruin. Indifference or antipathy has been turned for 
the present into gratitude. Working on this we can proceed 
to remedy the results of our neglect in the past by instituting 
simple measures necessary to teach these aliens to become 
real Americans and real citizens; with knowledge of our 
language they will begin to realize what our country is, and 
what it stands for, and this will inspire them with the desire 
to become citizens. 

The true spirit of this country has been brought out by the 
war. The casualty lists have shown that at the front, on the 
same footing, with the same opportunities, and treated as an 
equal with other soldiers, they have done their part as well as 
the best. All we need to accomplish the same result in do- 
mestic life is to treat them at home exactly as we treated them 
as soldiers in the field. 

The first step in Americanization is knowledge of our lang- 
uage, and experience shows that this can best be accomplished 
through industry. This does not imply that this alien educa- 
tion will be under the control of employers, and the alien put 
in danger of being used for selfish purposes; but with the co- 
operation of employers it should be under control of the State 
Board of Education, and State Board of Immigration, with 
the active assistance of labor organizations. 

We must in the interest of the alien as well as of the state 
in the shortest time turn the present body of non-English 
speaking aliens in Massachusetts into one which can listen 
intelligently to the appeal to become more intimately united 
with the people with whom they live. Failing to do this we 
will have in the non-assimilated alien a constant obstacle to 
efficient reconstruction policies, especially those arising out of 
the transfer of workers from war to peace industries, and to 
changes in wage standards, inevitable during the next two 
years. 

30 



The administration of the industrial accident law has shown 
that less than one-quarter of the casualties of industry can be 
reduced by safeguarding machinery. Further reduction in 
industrial accidents depends largely on the education of the 
worker to be careful of himself. 

While the easily seen benefits in reducing unnecessary labor 
turnover, most of which is unprofitable to employer and workers, 
and industrial accidents, will undoubtedly more than pay for all 
the cost of alien education, the much more important result 
of that education will be the removal of the main cause of 
misunderstanding between the employer and wage earner. 
This will help to destroy the power of anarchist and the radical. 
With knowledge of English the alien will develop increased 
intelligence, efficiency and better earning capacity. 

In co-operation with Mr. Bernard J. Rothwell, Chairman of 
the State Board of Immigration, the Committee on War Effi- 
ciency, attempted in May of this year to obtain the exact situa- 
tion in regard to the foreign-born in Massachusetts industry. 
To this end a questionnaire was sent out, and under Mr. Roth- 
well's direction the results have just been tabulated. The in- 
quiry was confined to manufacturing industries employing more 
than fifty persons. The state was divided into twelve prin- 
cipal industrial districts. Statistics as to native and foreign- 
born employees, details as to the sources of nativity, with 
ability to speak English or not, were obtained for six hundred 
and forty-seven thousand and five employees, or a little more 
than one-third of all the persons employed in this Com- 
monwealth. 

This inquiry shows that of this number of employees there 
were four hundred and forty-three thousand, five hundred and 
sixty-three men, two hundred and thirteen thousand, four 
hundred and forty-two women; and a total of two hundred 
and ninety-nine thousand, eight hundred and sixty-one foreign- 
born, or forty-six per cent. Of the foreign-born, thirty-eight 
thousand, one hundred and sixty could not speak any English 
whatever; sixty-five thousand, seven hundred and seven could 
understand English slightly and one hundred and ninety-five 
thousand seven hundred and seven could speak English more 
or less readily. The important fact is, that one hundred and 
three thousand, eight hundred and sixty-seven of the wage- 

31 



earners employed in manufacturing industries employing more 
than fifty persons in this state have little or no knowledge of 
English. 

This study explains why we have in Massachusetts two 
hundred and fifteen thousand persons, ten years and over, who 
cannot read or write in English and one hundred and eighteen 
thousand ten years and over who cannot read or write in any 
language.* 



CONCRETE AMERICANIZATION PROGRAM.f 
I. STIMULATION OF NATURALIZATION. 

1. Pass a law requiring registration of all non-citizens with city or 
town clerk. 

2. Have state district the cities and towns whose aliens are too nu- 
merous to be handled by one board. Director of naturalization activity 
(unpaid) to be appointed by Governor, Mayor or Selectmen for each 
district, city or town. 

3. Each local director should organize a corps of workers recruited from 
Chambers of Commerce (in Boston the Chamber of Commerce is already 
prepared to offer over three thousand active workers) Boards of Trade, 
civic, social and labor organizations. All should receive instruction in the 
attitude and purpose of the state in this work to enable them to explain 
to aliens why the Commonwealth is undertaking this work, educating 
them as to the privileges and duties of citizenship. Compulsory natural- 
ization is not to be encouraged, and must be guarded against. 

4. District workers should help each individual alien non-citizen to 
the next step in his program leading to naturalization, whether it be 
filing first papers, making most convenient arrangements for the acqui- 
sition of English, receiving instruction in the civics necessary to pass 
the court examination, or preparing for final papers. 

5. They should report regularly to the district director whose duty 
it will be to supervise the efficient following-up of all cases. 

6. The district director should forward to the State Board of Immi- 
gration the names of all aliens who refuse to take any steps toward natural- 
ization. 

7. The State Bureau of Immigration should keep these names ac- 
curately, recommending annually to the legislature such progress as 
has been made in Americanization of our alien residents, and the pre- 
paration of a plan which will put such residents who persist in remaining 
aliens in an unfavorable position as to employment, civic privileges, etc. 

* Reference, J. H. Moyle, Director Dept. of University Extension, 
f Suggested by Edward V. Hickey, Former Secretary to State Bureau 
of Immigration. 

32 



It enables us to understand why the anti-government agi- 
tator can recruit a following. It indicates a mass of people to 
whom our policies and ambitions are a closed book. To 
allow such a condition to continue, especially with the after- 
the-war needs immediately ahead of us, is an act of folly. 

As an industrial state we cannot hope to succeed well in the 
coming contest for home and foreign trade with a third of our 
industrial workers unable to speak with us. While not dis- 
couraging in them love for the lands of their birth, it is our 
duty to encourage in them a loyal spirit to the land of their 
adoption. 



II. CAMPAIGN TO TEACH ALL FOREIGNERS ENGLISH. 

i. Preparation by the State Board of Education of uniform courses 
in simplified English under direct-concept method, which has been demon- 
strated can teach the average foreign resident of Massachusetts to speak 
common English readily after forty -five one-hour lessons. 

2. Preparation by the State Board of Education of teachers in every 
city and town fitting them to teach under this simplified method. 

3. Statutory requirement that all foreign-born between eighteen and 
forty-five years of age, if unable to speak English readily, shall enroll and 
complete this course in the city or town in which they live. 

4. Establishment of classes in English under the supervision of the 
various local directors of naturalization in day schools, evening schools, 
and especially in manufacturing establishments, in co-operation with 
local school authorities and groups of manufacturers. 

5. Supervision of this instruction in English to foreign-born to be 
under the State Board of Education. 

III. INSTRUCTION IN LAWS, CUSTOMS, AND SPIRIT OF 

AMERICA. 

1. Comprehensive series of lectures in foreign languages as well as 
in English, under the direction of the State Board of Immigration, ac- 
companied by moving pictures, covering the history, government, economic 
and social development of the country, its laws, the duties and privileges 
of citizenship, etc. 

2. Weekly (at least) lectures in all classes (which may be combined 
for the purpose) in which English is being taught, covering this same 
ground. 

3. Preparation and insertion of articles covering these topics in the 
foreign language press, by authority of the state, under the direction 
of the State Bureau of Immigration. 



33 



LABOR. 

In November, 191 7, at the request of the Massachusetts 
Committee on Public Safety, I was appointed Chairman of 
the Committee on War Efficiency,* which, under the then 
plan of the Council of National Defence, was created to rep- 
resent the government in the formation of the national war 
labor program. Due to a discussion as to the source of author- 
ity at Washington, finally determined by placing it under 
the U. S. Department of Labor, my appointment as Director 
for Massachusetts of the U. S. Public Service Reserve and 
the U.S. Employment Service was not made until three months 
later. 

Preparation by the Committee on War Efficiency for the 
work ahead was continuous, and it was soon apparent that 
any plan devised to transfer workers from non-essential work 
of peace to essential war industries would be of much greater 
value if designed from the beginning also to be utilized for 
transferring them back to peace uses after the war. 

In many things the war forced us to think of subjects that 
had hitherto been disregarded. Skilled and unskilled labor 
became the scarcest commodity in the world. To stretch the 
available supply out to keep the war going and people at 
home supplied, forced recognition that inferior housing, with 
its result on the health and physical condition of the poor, was 
bad enough in peace, but when the nation wanted most effi- 
cient labor it could not expect to secure this by additional 
crowding in unsanitary areas. 

In like manner it was apparent that the presence in this 
state of many thousands of aliens, who, unable to be in- 
structed in their work or to take orders in English from their 
foremen, were thus at a time when we needed the greatest 
individual output, less efficient as producers.' They were the 
prey of enemy agitators, a cause of constant worry to the 
authorities. 

An Americanization program was therefore necessary. 
Equally important were programs for "Education," "Women 

•Mass. Committee on Public Safety, Henry B. Endicott, Executive Manager. 

Committee on War Efficiency : William A. Gaston, Chairman; Mrs. Nathaniel 
Thayer. William M. Butler. B. Preston Clark, W. M. Crane, Henry I. Harriman, Robert 
F. Herrick, Martin T. Joyce, James Logan, Arthur Lyman, Walter L. McMenimen, 
Joseph B. Russell. John F. Stevens. Edw. F. McSweeney, Executive Secretary; Mrs. 
Agnes E. McNamara (loaned by Civic Federation) Assistant to Secretary, 

34 



War Workers," "The Repair and Rehabilitation of the Injured 
in War, and also in Industry," "Statistics on Man Power," 
not only for during the war, but after it. The Committee on 
War Efficiency was able to enlist in its service for study and 
report on these topics, groups of experts for war service freely 
and patriotically performed to each of whom I wish most 
gratefully to express the personal obligation I am under for 
the work they did.* 

While this planning for war work and reconstruction was 
proceeding under the direction of these advisory committees, 
local agents of the U. S. Public Service Reserve in March, 
registered twenty-nine thousand mechanics who volunteered 
for shipyard work on call. Thousands of persons for special 



♦ADVISORY COMMITTEES. 
COMMITTEE ON WAR EFFICIENCY. 

William A. Gaston, Chairman. 

Labor Employment Agencies Mr. Charles F. Gettemy, Chairman, Direc- 
tor Bureau of Statistics. 
Women in Industry Mrs. Wm. A. Troy, Chairman. Mrs. Nathaniel 

Thayer, Woman's Committee, Mass. Div. Council of National Defense. 
Aliens in Industry Prof. Geo. Grafton Wilson, Harvard University. 

Mr. Bernard J. Rothwell, Chairman, State Commission on Immigra- 
tion. Mr. Geo. W. Tupper, Sec. Y. M. C. A. 
Housing and Transportation Mr. Robert A. Woods, Chairman. Mr. 

T. E. Donovan, Mr. Henry Sterling, Sec. Homestead Commission, Mr. 

R. Clipston Sturgis, Architect. 
Capital Expenditure Hon. Josiah Quincy, Chairman. Dr. F. A. 

Cleveland, Mr. Theodore Waddell, State Bureau of Statistics. 
Training in Industry Mr. F. V. Thompson, Supt. Boston Schools, 

Deputy Commissioner of Education R. 0. Small, Dean Everett W. Lord, 

College of Business Administration, B. U. 
Health in Industry Dr. E. R. Kelly, Chairman, Commissioner of 

Health. Dr. F. D. Donoghue, Medical Advisor, Industrial Accident 

Board. Dr. M. V. Safford, Hon. Edwin Mulready, Commissioner of 

Labor. 
Idle and Casual Labor Mr. Benj. C. Weakley, Chairman. Rev. 

Michael J. Scanlon, Mr. Franklin P. Daley. 
Industrial Man Power Survey Dr. Donald B. Armstrong, Chairman. 

Mr. Robert N. Turner, Mr. Percy Broderick, Industrial Accident 

Board. 
Publicity Mr. T. J. Prather, Chairman. Mr. John Morgan, Mr. John 

F. O'Connell, United Shoe Machinery Co. 

35 



war purposes of the government were recruited, and a plan of 
co-operation between employers and wage earners for the trans- 
fer from non-essential to essential war industries was devised. 

In July, 1018, a State Advisory Board, consisting of equal 
representatives of management and labor organizations was 
appointed to assist the Director,* and about two score Labor 
Community Boards, each having full charge of the labor pro- 
gram in their separate localities, were created. 

In August, 1918, I resigned my position, the vacancy being 
filled by the selection of Dean Everett W. Lord of the College 
of Business Administration of Boston University. An able 
man, who for years has been devoting himself to educational 
work to meet the needs of modern enterprise, Dean Lord and 
his associates on the Advisory Board can be trusted to do 
everything possible to carry out the labor program for Massa- 
chusetts in an efficient manner. 

It should also be said that the support given me by labor 
organizations and manufacturers was most cordial and satis- 
factory. Both were willing to bury past differences in their 
earnest desire to make the program a success. 

It was intended originally that the concentration of labor 
activities for war purposes should be under the direction 
of a division of the Council of National Defence, putting 
the extraordinary measures for mobilization of labor for war 
work on the same basis as the Food and Fuel Administra- 
tions, with authority for war exigencies, which could when 
the emergency war need ceased close out their offices, leav- 
ing Congress to provide for continuing such part of their 
program as was necessary for the reconstruction period. The 
final placing of this authority in the U. S. Department of 
Labor delayed consideration of all plans, and it was not until 
midsummer that a semblance of order began to emerge out 
of the chaos of administrative details deemed necessary to 
get the new department started. The national labor pro- 



* State Advisory Board: 

William A. Gaston, Chairman. 
Alfred A. Glidden, Management. 
Albert R. White, Management. 
Martin T. Joyce, Labor. 
William A. Nealy, Labor. 

36 



gram, therefore, has been organized but a comparatively few 
months, and the war has ceased before the intricate organiza- 
tion designed for war purposes has been placed on a working 
basis. Its whole energy, if continued, must be reversed for 
peace purposes. 

At the present moment, with war at an end, a theoreti- 
cally united control of employment service has been created. 
Employers of labor have loyally, but in many cases unwillingly, 
accepted the decisions of the department because they would 
not take an attitude of opposing any government order issued 
for the purpose of winning the war. The labor organizations 
have been co-operative, but in the multiplicity of conflicting 
authorities, one having charge of labor recruitment and place- 
ment, another of wages, another of labor conditions, another of 
priorities, employer and employee have been confused, and 
cannot reasonably be expected to embrace in peace times 
sumptuary regulations and administrative policies in which 
they do not believe, or in which, in the light of experience, 
they cannot honestly find any hope of advantage or permanent 
usefulness to the nation. 

Any undertaking of this magnitude under stress of war emer- 
gency is certain to show a percentage of waste which cannot 
be justified by the results achieved. The U. S. Department of 
Labor will find it difficult to demonstrate that it is possible to 
utilize the machinery, built up by it for the control of war 
needs, to restore this war labor to peace industry, and also to 
provide for the important problems of unemployment before 
us. It is also a practical impossibility to enforce the general 
rules which must be made from Washington for different sec- 
tions, with different labor and industrial needs. 

A national control of labor employment in all its aspects 
can hope to succeed only by adopting the most general policy 
and permitting each state to work out its own detailed prob- 
lems. The official in charge at Washington may be perfectly 
sincere when he plans for a labor program based on the needs 
of the agricultural or fruit or mining regions of the far west, 
where conditions are known to him, but the general orders 
issued on this basis are doomed in advance to be worthless 
when applied to the highly specialized shoe, cotton, and 
other industries of Massachusetts, or to the steel industries of 

37 



Pennsylvania. The difference in wages, labor conditions and 
labor laws in the various parts of the country only increases 
the difficulty. 

A concrete example of this was shown last spring. Notice 
came from Washington to prepare to secure enrollments for 
volunteer vacation farm labor. A volunteer organization that 
had shown extreme efficiency in the shipbuilding drive in 
Massachusetts was made ready. About April 15, 1918, letters 
and telegrams were sent to Washington, appealing for the 
forms, circulars and general publicity. No reply being re- 
ceived, work was instituted independently. About the middle 
of May it developed that in the west the only farm labor need 
was in midsummer for the harvest: the department being ap- 
parently unaware that the farmer in Massachusetts needed 
his help most of all during the planting period beginning in 
May or before. 

The Department of Labor, created to enforce labor laws, 
was never intended, in my opinion, to be expanded to the con- 
trol of industry in peace times such as was justified by the 
extreme emergency of war needs. The importance of the issues 
at stake, and the need of strengthening the permanency of our 
industrial structure should force the nation to consider and 
decide without delay on the widsom of continuing as a peace 
measure this strictly war machine, and this decision should 
not be made without the most careful thought being given 
to its effect upon the industrial interests of each of the states. 

One result of the creation of the U. S. Employment Service 
was the establishment theoretically and, to a certain extent, 
actually, of a government monopoly of the labor market, 
incidental to which many private employment agencies operat- 
ing on a commerical basis by making a business of furnishing 
employers with help through the exaction of fees have been 
driven out of business. Some of these agencies, particularly 
those working among aliens had been guilty of practises, which 
have left them without friends to mourn their death; others, 
conducted on a better standard and free from the grosser 
abuses of the business, suffered likewise. 

There are great possibilities to industry, in a system of 
public labor exchanges, which through the operation of a 
central clearing house arrangement will reduce, turnover and 

38 



stabilize labor to the advantage of employee and employer. 
Nothing is so conducive to good order as the general employ- 
ment of the people, and bringing together of employers in 
need of help and of individuals needing employment is, very 
likely, to be increasingly recognized as a public function. 

For many years public employment offices have been main- 
tained in various states, usually supported entirely from 
the state treasury; but, in some cases, managed by munici- 
palities. Massachusetts 12 years ago organized free em- 
ployment offices situated in Boston, Worcester and Springfield. 

Under the pressure of war emergency, these offices in Massa- 
chusetts were capable, in my opinion, of expansion along 
lines of much greater usefulness to our large industrial interests 
and wage earners generally, by establishing additional offices 
at strategic industrial centers, and also developing their func- 
tions along more intensive lines. The needs of the war and 
with employment itself primarily a war question made it unwise 
after the decision of the U. S. Labor Dept. office to under- 
take general control over employment and expansion of the 
public employment office system in Massachusetts. The 
co-operation of the state offices was most cordial and efficient, 
but now that demobilization has begun, the necessity for main- 
taining a federal employment service in states which have 
established a similar service must be decided. Those con- 
cerned with the industrial welfare of the Commonwealth should 
arrive at a definite decision whether their interests will best 
be served by a State agency immediately responsible and 
responsive to them as taxpayers supporting it, or by an organi- 
zation whose headquarters and seat of final authority is in a 
bureau of the federal government at Washington. 

Forty per cent of the seven hundred and eight thousand, 
four hundred and twenty-one persons in manufacturing in- 
dustries in Massachusetts in 191 8, are estimated to have 
been engaged in war work.* At the very minimum, five 
hundred thousand persons in this state were transferred from 
normal industry to war and war industry. The transfer of 
labor under demobilization in manufacturing and mercantile 
industries will be a slowing down process. Workers will grad- 



* Director of Statistics, State House. 

39 



ually be employed on peace products. Enlisted men expect 
as a rule to return to the places they held before the war, 
displacing those filling their jobs, so, as far as they are con- 
cerned, the unemployment problem will not be changed. 

A large number of persons who in normal times were without 
occupation and unskilled, the unemployed, the half employed, 
many on the verge of being workless, have found war em- 
ployment at high wages, but cannot hope to hold their places 
under the pressure of capable and efficient competition of 
the now released workers seeking employment. Women for 
whom the minimum wage was formerly urged, employed at 
small wages, or in domestic service, who have found in munition 
factories vastly greater wages than skilled male workmen 
received before the war, will find under the new conditions 
not only their occupation gone, but difficulty in getting their 
old work at all, even at greatly reduced wages. 

While the situation is not yet acute, it is ahead of us. The 
day after the armistice was signed it was found that the em- 
ployment situation had been changed over night. The pres- 
sure of employers to get help was removed. There is and will be 
for a long time a demand of workers to get employment. 
On December fourth, the War Department announced 
that it had cancelled war contracts aggregating two 
billion, six hundred million dollars. The recent announcement 
that the War Department will withhold cancellations of war 
contracts until after state Federal directors and community 
labor boards have opportunity to obtain information as to the 
industrial conditions in the localities concerned will, if carried 
out, be of great help in retarding an unemployment crisis. 

The painful feature of this question is that wage savings 
have not been the rule among war workers. Longing all their 
lives for luxuries which they always hoped to be able to obtain, 
they refused to consider the possibility of the high wages ever 
coming to an end. They have created for themselves new 
wants and a higher standard of living. They will resist re- 
turning to reduced wages, and it is among this class that the 
radical, seeking to destroy good government, will find fields 
for the spread of destructive teachings. 

The press announcement by some labor leaders that any re- 
duction of wages will be followed by industrial war was, if true, 

40 



as unwise as the expectation that wages will be shortly forced 
down to the plane before the war. During the war many 
wage earners have received increases in wages which more 
than compensated for the increased cost of living. To this 
class the war did not in any sense represent sacrifice, but 
the contrary. A large class of workers received increased 
wages, which in part compensated for the advanced cost of 
living, and to the amount of this difference they are worse 
off with their advanced wages than they were in 1014. To 
clerks and salaried officials, and to an extent the professional 
classes, increases in incomes, if any, were altogether dispro- 
portionate to the increased cost of living. The purchasing 
power of each dollar received by them is approximately three- 
quarters of what it was only four years ago. This class, and 
it is a large one, has suffered severely. 

Rearrangement of wage schedules after the war must there- 
fore depend in large measure upon the factor of the cost of 
living. The value of the wage received by the wage earner 
depends on what he can purchase for each dollar. Any atti- 
tude by wage earners that war wages are inflexible, and not sub- 
ject to any change, or on the part of employers that wages must 
be reduced without regard to the cost of living and the main- 
tenance of living standards, is only an invitation to trouble. 

The nation has a right to ask that in the competition for 
increased foreign trade, the unions in their own interest will 
resist any artificial restriction on the energy and output of 
their members, and especially to resist any attempt to sub- 
stitute trade union control as a wedge between its members 
and the state, thus to become the source of authority and unit 
of industrial control. In the long run this would be destruc- 
tive of union prestige. 

Unemployment has never been absent in the United States. 
In recent years we have had panics, in 1893, 1907-8, and in 
19 1 4 and 191 5. It is not anticipated that our employment 
problem will be acute until next year, after which, unless 
averted by prompt and wise action, it may continue for some 
time at least thereafter. If this theory is correct we have 
time to increase our opportunities for employment by pro- 
viding better facilities for freer intercourse in the home market, 
and by stimulating use of our ports as outlets for foreign trade, 

41 



to keep our workers profitably employed and these problems 
are perhaps more important to the worker than to any other 
class in the community. 

After the civil war the period of depression which set in 
in 1866 was short-lived. The industrial expansion which 
began in 1867 was helped by the opportunities and develop- 
ment of our western territory. The great tracts of unsettled 
land then available do not exist to-day, but there are still 
wonderful opportunities in the United States for developing 
our agricultural production. We hope that many soldiers for- 
merly employed in factories will, after their life in the open, 
seek out-door employment on farms and otherwise. This will 
undoubtedly be encouraged by the government which must 
keep its three million enlisted men from demoralizing indus- 
try by keeping its armed forces under military control until 
they can safely be absorbed. In addition the government is 
to-day employing millions of men on railroads and in other 
occupations. It can regulate industries, inaugurate new 
business, and can expend billions of dollars on railroad im- 
provement, rolling stock, double tracking, electrification, 
building highways, housing and irrigation. Compared to the 
difficulties of readjusting the civilian war workers, the danger 
from the enlisted men is negligible. 



48 



The foregoing chapters have been devoted to some of the local 
problems on which we can begin to work, because, while fun- 
damental, they are wholly under our control. The great 
questions to be settled are not alone the lines of territorial 
changes; and the freedom of subject peoples, which have 
in the past been the main object and purpose of war, but the 
foundation must be laid for a new system of civilization, accept- 
ing the fact that unfair trade competition is as much to be 
feared as a disturbing element as war. Provision for regu- 
lating trade and commerce must not be confined to the elimi- 
nation of tariff hostility and discrimination, but secure to each 
country the advantage of the education, training and special 
advantages given its people and the right to a complete develop 
ment of its resources. 

Fifty years ago the people of the United States were not 
affected by a famine in China, but to-day if a million persons 
are starving in India it increases the pressure on the people 
of the whole world. We are all vitally interested in the 
question of after the war feeding of the world. Our surplus of 
food stuffs, raw materials and necessities, must be apportioned 
according to actual needs, before the exportation of luxuries 
in any form, under strictest regulation, to avoid international 
as well as home profiteering. Done wisely this will stimulate 
production in these foreign countries; it will reduce the cost 
of living, and, of more importance, it may also favorably answer 
the question as to whether there is too much labor power 
in the world, and with this solve the problem of unemployment 
and its attendant evils. 

The leading banks of the United States which have for many 
years been making preparations for providing facilities for 
trade in South America are vitally interested in these larger 
questions of world trade because of the tremendous demand 
for vast sums which will be needed for rehabilitation in Europe. 
Preparation must at once be made for the forms of security 
required for the purchase of material, machinery and equip- 
ment necessary to build up the war devastated areas in France 
and Belgium and through to the far East. This work, if 
carefully planned, and well carried out, can keep the workers of 
the United States occupied profitably while the readjustment 
from war is going on. Banks and investors in this country 

43 



must prepare to absorb securities properly and wisely issued 
necessary to provide these credits. 

To keep and improve our trade with South America, Africa 
and the Orient, greatly increased under the circumstances of 
war, we must invest money largely in those countries. South 
America needs money not only for the development of its 
industries, but also to develop municipal undertakings, water 
power, and railroads. 

In Boston we have the opportunity to receive raw materials 
from all over the world, and by the exercise of good business 
ability and with the joint effort of labor and capital, to turn 
them into New England products which will keep our citizens 
employed. 

The question of the nationalization of our railways is a 
vastly different one than national control of the rest of our 
industries. Neither in England nor in France, or even in 
Germany, has the experiences resulting from state control of 
operation of industry, been encouraging. To imagine that 
we can maintain the industrial supremacy of the United States 
in times of peace against the competition of the world, under a 
system of general state control of industry, must be futile. 

In any case, the solution of these important problems cannot 
be left to chance. If we drift along and permit these questions 
to be decided as they present themselves for action, hap- 
hazardly or by the accident of political power, they are certain 
to develop internal difficulties, imperil our industrial future, 
increase the problems of capital and labor, and in general, 
make more difficult our problems of government. 



44 



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